Archive for June, 2009

I have often mentioned before that the those impressive graphs of rising surface temperatures are faked, as if everyone knew, and everyone agreed, inadvertently imitating the mock consensus style of the warmists, without giving a citation. Here is the article that exposed the fakery for the US weather stations

Bad credit?
No credit?
No problem! Buy the house of your dreams with no money down!

Well thanks to the great Bush-Obama stimulus package, looks like you will be seeing it again.

When the government says that private lending has dried up, this is code for the strange absence of no money down loans to people with bad credit. People I know, such as my sister in law, who had money and good credit found that lenders rolled out the red carpet for them. There was never lending crisis for traditional borrowers.

When the government says there is a lending crisis, it means the problem is that a drunken no-hablo-English wetback seems to be finding a bit of trouble borrowing. But never fear. Your ever helpful and benevolent government is remedying this terrible market failure. Whatever would we do without regulation and subsidy?

The FHA is now providing one hundred percent government guarantees for loans to people with bad credit. Supposedly the borrower must put three and a half percent down, but since real estate agent fees, mortgage broker fees, and assorted charges theoretically add up to slightly over ten percent, a clawback from the various people involved can and does reduce this to zero. When I transact a house, I usually manage to clawback four to six percent from these various charges, so if I was purchasing a house with what on paper was a three and half percent down loan, and managed to get my usual clawbacks, I would get the house and two percent cash in hand – negative money down. And that is without a kickback from the seller. Of course that is why the lenders would rather do the loan with a drunken no-hablo-English wetback, who is unlikely to be so fierce at clawing back and chiseling down their fees as I am.

When you buy a house on a loan with small money down, you usually also get an under the table kickback from the seller. With a kickback from the seller and clawbacks from agent and broker fees, three and a half percent down vanishes fast.

Supposedly we should stop worrying about inflation, because the bond markets predict only moderate levels of inflation. Supposedly we can determine future inflation by looking at the difference between Treasury Securities, and Treasury Inflation Protected Securities. Supposedly, this tells us what the people investing in securities think that inflation will be, and they are pretty good at predicting inflation.

However, this tells us only what people who are confident that inflation will be moderate think inflation will be, because if you are worried about immoderate levels of inflation, you do not diversify into long term Treasury Inflation Protected Securities, you diversify into gold, silver, guns, ammunition, rice and beans, which is roughly what the Chinese are doing, except that they are also diversifying into copper and iron, and private Chinese are not allowed to diversify into guns and ammo.

The bond market does not tell us what the smart money people think inflation will be. It tells us what those among the smart money people who do not expect very high levels of inflation think inflation will be.

What are the Chinese worried about?

They are not worried about the possibility four percent inflation in 2011. They are worried about the possibility of four hundred percent inflation in 2020. And so they are not buying Treasury Inflation Protected Securities. And so the difference between Treasury Securities and Treasury Inflation Protected Securities fails to reflect their concerns. And so, if we look at the bond market, what it tells us is that the Chinese think inflation may well hit four percent in 2011, but does not tell us what they think inflation will be in 2020. But if you listen to what they are saying, what they are saying is that they think there is a substantial risk of very high levels of inflation in eight years or so.

Governments tend to go down the tubes when total public debt is around two hundred percent of GDP or so. Thus a deficit of ten percent of GDP or so is sustainable for ten or twenty years or so. Trouble is that in addition to an on budget deficit of ten percent or so, there is also a much larger off budget deficit, in the form of an ever growing pile of government guarantees, which there is no will to restrain. Put the two deficits together, crisis looms.

In a free market, financiers who take stupid risks lose money, and cease to be financiers. The core of the Obama Bush interventions is to ensure that financiers who take stupid risks continue in business and continue in charge of other people’s money.

In theory, securitization should serve to reduce credit risk by spreading it more widely. But by breaking the direct link between borrowers and lenders, securitization led to an erosion of lending standards, resulting in a market failure that fed the housing boom and deepened the housing bust.The administration’s plan will impose robust reporting requirements on the issuers of asset-backed securities; reduce investors’ and regulators’ reliance on credit-rating agencies; and, perhaps most significant, require the originator, sponsor or broker of a securitization to retain a financial interest in its performance.

“How big a financial interest?” I hear you ask.

Summers is a little bit vague, about this, but if you dig, the answer is five percent – enough to make a difference, but not enough to make a significant difference, not enough to deter banks from making irresponsible loans.

The fundamental problem is that the government wants banks to continue make loans to irresponsible borrowers in important voting blocks, borrowers who should not be able to borrow money, and therefore must maintain a regulatory structure that enables bad loans. A transfer of wealth from a concentrated interest group (financiers) to an important voting block (hispanics) is not politically feasible. So instead, such dud loans must ultimately wind up being financed by the government.

The government issues regulations that require financiers to refrain from “discriminating against” a voting block – which seeming benefits the voting block at no cost to the government. But there is no such thing as free lunch. Who will pay?

E-gold is only dead the way Napster is dead. Like Napster they demonstrated that the business model was viable, and also demonstrated that as soon as you started transferring serious money the US government would come after you. As a result, there are a lot of replacements for e-gold, which the US government will find hard to shut down, notably Pecunix and Webmoney.

As everyone knows, modern art is crap, and modern poetry is crap. Unfortunately, modern science is rapidly becoming crap. As Climate Audit shows, global warming “science” has abandoned that inconvenient stuff about replicable results. When global warmers supposedly prove something, they don’t reveal the underlying observations, the method of calculation, or any “corrections” they made to the raw data and refuse to reveal them when asked by incredulous scientists. Engineering and technology is still going strong, but the steadily falling status of engineers and technologists indicates doom on its way, much as science and art died in Rome when its status became contemptible

“OK”, I hear you say, “but Global Warming is political. How about the real hard sciences, like high energy physics?”

Well, I have been reading Not even wrong, which tells us a disturbingly large amount of modern high energy physics is not even wrong. They are not as far gone as global warming, but they are in a pretty bad way.

Moldius Moldbug does provide a theoretical explanation: Government funding leads to unfavorable memetic selection. Under government patronage memes that correspond to effective grantsmanship outcompete memes that correspond to truth or beauty. Private patrons, armored against manipulation by wealth, power and arrogance, and the fact that they do not have to consult with anyone, and often experts or connoisseurs in the area they are funding, are not so manipulable, thus provide an environment where beautiful art and true science can outcompete grantsmanship.

The Goode family are too nice and sincere to laugh at. Where is the liberal fascism and liberal totalitarianism? Observe that the kid gets away with defining his ethnicity as “African American” (he is white from South Africa) while in real life the kid from South Africa who pulled that stunt got expelled from college.

The only funny character is the dog, because he is rebelling against the family veganism by devouring every neighborhood pet smaller than himself.

The show fails because it is too soft on liberalism. To get a laugh, have to stick the knife in and twist it a bit. This show is too much like “Father knows best”

The only part of the first episode where they really stick the knife in, and follow it up with a few boots to the head, is, of course, where they stick the knife into fundamentalist Christians.

The Goode Family are genuinely and sincerely trying to do good. That is not funny. They should be genuinely and sincerely deluded that they are doing good. That would be funny.